BASAL TRADING AND SONS LTD v. DIAMONDS INC (2023)

Order, Supreme Court, New York County (Debra James, J.), entered on or about December 7, 2021, which granted defendant's motion to dismiss the complaint pursuant to CPLR 3211(a)(5) and (7), unanimously modified, on the law, to deny the motion to dismiss the causes of action for breach of contract and unjust enrichment, and otherwise affirmed, without costs.

Plaintiff alleges that, in 2009, it entered into an agreement with defendants to form a partnership that would hold a one-third interest in another partnership that, in turn, would purchase three diamonds in “rough” form for polishing and then resale.  Plaintiff alleges that the partnership agreement with defendants provided that plaintiff and defendants each held a 50% interest, which would entitle each of them to receive one-sixth of the proceeds of the sales of the three diamonds.  Pursuant to the alleged agreement, plaintiff contributed over $509,000 “for the purchase price and related expenses of the three diamonds.”  Plaintiff received its share of the proceeds from the sale of two of the diamonds but, it alleges, when the third diamond was sold in 2019 for over $1 million, defendants received the partnership's entire share, but refused to distribute to plaintiff its half.

The alleged partnership or joint venture agreement does not fall within the ambit of the statute of frauds (General Obligations Law § 5–701[a][1]), which requires agreements to be in writing when, “by their very terms” they “have absolutely no possibility in fact and law of full performance within one year” (D & N Boening, Inc. v. Kirsch Beverages, Inc., 63 N.Y.2d 449, 454, 483 N.Y.S.2d 164, 472 N.E.2d 992 [1984]).  Here, the alleged agreement between the parties, by its terms, could have been terminated or completed within one year, however unlikely that might have been (see Freedman v. Chemical Constr. Corp., 43 N.Y.2d 260, 401 N.Y.S.2d 176, 372 N.E.2d 12 [1977];  Financial Structures Ltd. v. UBS AG, 77 A.D.3d 417, 418, 909 N.Y.S.2d 45 [1st Dept. 2010];  Foster v. Kovner, 44 A.D.3d 23, 27, 840 N.Y.S.2d 328 [1st Dept. 2007]).

The complaint adequately pleads the essential elements of a breach of contract claim, including the terms of the alleged agreement, consideration, performance by plaintiff, the alleged breach by defendants, and resulting damages (PF2 Sec. Evaluations, Inc. v. Fillebeen 171 A.D.3d 551, 552, 98 N.Y.S.3d 162 [1st Dept. 2019]).  Contrary to defendants’ contention, the complaint, together with an affidavit of plaintiff's principal, alleges that the parties to the agreement were plaintiff on one side and all four defendants on the other, and that the agreement resulted from oral negotiations between plaintiff's principal and defendant Malakov, which was evidenced at least in part by documents annexed to the affidavit.  In the context of a breach of contract claim, no further particularity is required (CPLR 3013;  compare CPLR 3016[b];  Jonas v. National Life Ins. Co., 147 A.D.3d 610, 612, 48 N.Y.S.3d 77 [1st Dept. 2017]).  Since a cognizable cause of action for breach of contract can be discerned from the factual allegations of the complaint, the motion to dismiss that claim must be denied (Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 275, 401 N.Y.S.2d 182, 372 N.E.2d 17 [1977]).

Plaintiff also adequately pleads a cause of action for unjust enrichment.  In addition to providing funding for the purchase of the three diamonds, plaintiff alleges that it provided its expertise, which defendants lacked, in determining whether the diamonds constituted a good value.  In short, plaintiff allegedly conferred benefits upon defendants concerning the appraisal, purchase, and finishing of the three diamonds for which plaintiff reasonably expected to receive a half share of the sale proceeds, which defendants allegedly unjustly pocketed (see Norcast S.ar.l. v. Castle Harlan, Inc., 147 A.D.3d 666, 668, 48 N.Y.S.3d 95 [1st Dept. 2017];  Paramount Film Distrib. Corp. v. State of New York, 30 N.Y.2d 415, 421, 334 N.Y.S.2d 388, 285 N.E.2d 695 [1972]).  Although the claim mirrors plaintiff's breach of contract claim, defendants raise a bona fide question as to whether a contract existed (see Foster v. Kovner, 44 A.D.3d at 29, 840 N.Y.S.2d 328).

Finally, the court properly dismissed plaintiff's claim seeking the imposition of a constructive trust, as the sole remedy plaintiff seeks is money damages based on the sale proceeds of the third diamond that it alleges defendants improperly retained (Evans v. Winston & Strawn, 303 A.D.2d 331, 333, 757 N.Y.S.2d 532 [1st Dept. 2003]).